What is VoIP? How does it fit in to my business? And will it save me money?

Cisco 7941

So we’ve all heard of VoIP right? Do we really know what it is and what it looks like? Is it better? Isn’t Skype VoIP?

Lots of questions!

Let’s start at the beginning.

Way back some traditional office phone system manufacturers recognised that life would be easier if they could attached their phones to the computer CAT5 network. This would mean that the phones wouldn’t need their own dedicated cabling back to the phone switch and moving extensions around would become a whole lot simpler by simply moving cables around in the server room.

Then a few enterprising companies thought…why don’t the phones become part of the data network and use the same technology as the computers to talk back to the phone switch. This was the birth of LAN telephony. In the server room the same traditional phone switch connected to an ISDN2 or ISDN30 as before, but instead now used a data connection for the phones and switch to talk to each other.

The next step was for these same manufacturers (and some new ones by now) to enable the use of the same method to now route branch phone calls over their office internet connection rather than breaking out in to POTS (Plain Old Telephone Service). For multi branch business suddenly calling different offices became free! Basic VoIP was here.

A few consumer services popped up, notably Skype (now owned by Microsoft), which took advantage of people’s internet connections at home to allow them to use the internet to call other Skype users around the world for free, or for a low-ish cost, regular landline or mobile numbers. Skype works by using something called Peer-Networking, where the call is routed through a number of Skype users eventually to the recipient. Whilst very secure, this caused some concerns for business users and the potential for calls to be eavesdropped so take up in the commercial space was tiny to be virtually non-existent so ISDN was still very much in use.

Now that branch-to-branch calling within a business was possible with VoIP, the next stage was to move the phone system out of the office and in to the Cloud. Using some clever technology, the office now only needed some intelligent telephones that would “reach out” into the internet and connected to a phone system hosted by a telecoms company. These phone systems could then be partitioned so each customer is isolated from each other but take advantage of the scale a larger system can provide (very much in the same vein as hosted Exchange works). All calls are then connected to POTS via the telecoms companies connection into the BT network. This is known as Hosted or Managed Telephony and uses VoIP as the mechanism to make it all work.

So it is better? Cheaper?

The main reasons for switching to a hosted solution is not really around cost or should be a cost based decision. The key difference is this type of service is delivered via a subscription model (so per user per month) rather than a combination of Cap-Ex, Line Rental, Maintenance etc from a traditional system. So over a lifetime you will probably spend a similar amount of money, but distributed more evenly over (say) a 5 year period.

The key benefit is that you end up with a better solution with much higher levels of features that exist only in a much “bigger” system without having all the optional extra costs such as auto-attendant, voicemail etc. Being a subscription based service you can scale up and down (although admittedly scaling down can be a challenge) depending on need, and as a non location specific service you can have your “work” phone on your desk, on your mobile or at home without needing to muck about with diverting etc. It makes working from home a lot more invisible to your customers! And one of the best bit’s is that you can transfer your existing BT number across (which are tied to the local exchange) which means any future office moves won’t affect your phone number.

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So should you consider it? Here at the Engine Room we switched to VoIP (with Voicenet now 8×8) a few years ago as a low cost entry into a more clever phone system when the size of the team started to grow. Having had a number of office moves since then, not having to deal with BT, new phone numbers etc is a massive saving in time and hassle.

If you’re thinking about moving office, you should definitely think about it, and if you have an obsolete or at capacity traditional system it’s worth exploring. Come talk to us and we can guide you though the best options to suit your business.